- 1 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF JANUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 38151 OF 2025 (GM-RES) BETWEEN: 1. M/S MYTHREYI PROMOTERS AND DEVELOPERS PRIVATE LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFILCE AT NO 152 20TH MAIN 12TH CROSS JP NAGAR II PHASE, BENGALURU 560078 REP BY ITS MANAGING DIRECTOR MR B K RAJENDRAN AGED ABOUT 66 YEARS 2. MYTHREYI DEVELOPERS A PARTNER SHIPFIRM HAVING ITS REGISTERED OFFICE AT NO 152, 20TH MAIN 12TH CROSS JPNAGAR 2ND PHASE BENGALURU 560078 REP BY ITS PARTNER MR B K RAJENDRAN AGED ABOUT 66 YEARS 3. MR B K RAJENDRAN S/O N KUPPASWAMY Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 AGED ABOUT 66 YEARS R/A 48/A SRUSHTI , 11 CROSS 6TH MAIN J PNAGAR BENGALURU 560078 4. MYTHREYI ESTATES PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT NO 152, 20TH MAIN 12TH CROSS J P NAGAR 2ND PHASE BENGALURU 560078 REP BY ITS DIRECTOR MR B K RAJENDRAN. 5. MYTHREYI ADDRESS LLP HAVING ITS REGISTERED OFFICE AT NO 152 20TH MAIN, 12TH CROSS J P NAGAR 2ND PHASE BENGALURU 560078 REP BY ITS PARTNER MR B K RAJENDRAN. 6. MYTHREYI INFRA SPACES LLP HAVING ITS REGISTERED OFFICE AT NO 152 20TH MAIN 12TH CROSS JP NAGAR 2ND PHASE BENGALURU 560078 REP BY ITS DESIGNED PARTNER MR B K RAJENDRAN …PETITIONERS (BY SRI.MANMOHAN P N.,ADVOCATE) - 3 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 AND: 1. STATE BANK OF INDIA RACPC BANASWDI 253 DOLPHIN MANSION, BUS DEPOT HENNUR MAIN ROAD NEAR HENNUR HBR LAYOUT 2ND BLOCK, 3RD BLOCK HBR LAYOUT, BENGALURU 560043 REPRESENTED BY ITS BRANCH MANAGER 2. FRAUD IDENTIFICATION COMMITTEE STATE BANK OF INDIA LOCAL HEAD OFFICE BELLARY ROAD BENGALURU 560 024. …RESPONDENTS (BY SRI. VIGNESH S SHETTY.,ADVOCATE FOR R1 AND R2) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 04/10/2025 BEARING NO. FMC/RO/2025-26/582 PASSED BY THE R2 (PRODUCED AS ANNEXURE-L) AND CONSEQUENTLY DIRECT THE RESPONDENTS TO FORTHWITH REMOVED THE NAME OF PETITIONERS FROM ALL LISTS, RECORDS, COMPLAINANTS, AND COMMUNICATIONS - 4 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 WHEREIN THE PETITIONERS HAVE BEEN IMPROPERLY TAGGED OR CLASSIFIED OR DECLARED AS FRAUD; DIRECT THE RESPONDENTS TO ISSUE A COMMUNICATION TO ALL CONCERNED AUTHORITIES, BANKS, ETC. DECLARING THAT THE PETITIONERS HAVE NOT COMMITTED ANY FRAUD. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD ORAL ORDER The first petitioner, who is party to a sale transaction with the first respondent’s borrower, is joined by the group entities in making a grievance against the second respondent’s order dated 04.10.2025 [Annexure-L]. The second respondent is a Committee constituted by the first respondent under the Reserve Bank of India [Fraud Risk Management in Commercial Banks[including Regional Rural Banks] and All India Financial Institutions] Directions, 2024 [for short, 'the Master Directions']. - 5 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 The second respondent, by this impugned order, has reasoned that the first petitioner and its representative must be reported as 'fraudsters' to the Reserve Bank of India [RBI] as per the guidelines. 2. Sri. Vignesh Shetty, the learned counsel, on behalf of the first respondent, places on record the following to justify the second respondent’s decision. [a] The first respondent has processed the borrower’s loan application based on an agreement which showed the agreed value as Rs.2,60,00,000/-, and because of such value, a sum of Rs.1,95,00,000/- is sanctioned as loan and disbursed. [b] The sale deed is concluded for a much lower value, and the loan is under distress because of a default. The default is because of the fraud contrived between the petitioners’ representative, the - 6 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 borrower [the purchaser] and the owner of the property. [c] A loan much higher than the permissible loan is obtained. 3. Sri Manmohan P N, the learned counsel for the petitioners, submits that the first petitioner can dispute neither the receipt of Rs.1,95,00,000/- as part of the agreed consideration nor that it has acted as a Power of Attorney and Confirming Party in the transaction, but the first petitioner is bona fide in asserting that though the initial agreed value was Rs.2,60,00,000/-, this amount had to be revised because of Covid-19 restrictions and the resultant constraints to complete the transaction in a time bound manner. On the participation in the proceedings with the second respondent, the learned counsel does not dispute that a Show Cause Notice [as contemplated under paragraph 2.1.1.1 under the Master Directions] is addressed to the petitioners but - 7 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 contends that some person within the hierarchy of the first petitioner has refused to receive the notice without understanding the significance of the fallout from the proceedings. 4. The question is whether this Court must intervene to set aside the second respondent's order and restore the proceedings for reconsideration with some opportunity to the petitioner. This question is examined in the light of the second respondent’s observation, and the second respondent has observed that it has relied upon the documents produced by the first respondent to declare the first petitioner and its Managing Director 'fraudsters'. This view is only because of the petitioners' failure to place on record material that perhaps could justify its defense as against being labeled as 'fraudsters' and that the ends of justice demand that the petitioners must have a reasonable opportunity because the petitioners' business otherwise could be brought - 8 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 under jeopardy with such a declaration. Hence, the following: ORDER [a] The petition is allowed in part quashing the second respondent's order dated 04.10.2025 [Annexure-L] but restoring the proceedings to the second respondent for due consideration leaving open all contentions to be considered. [b] The petitioners shall respond to the show-cause notice before 23.02.2026 and thereafter the second respondent shall pass a reasoned order in the light of the response that is shown. [c] The first respondent shall ensure that the information about this Court's intervention is uploaded, and such - 9 - HC-KAR NC: 2026:KHC:5516 WP No. 38151 of 2025 communication will be subject to further consideration. Sd/- (B M SHYAM PRASAD) JUDGE AN/-